‘Percentage of bank’ bombshellKNOCKOUT KELLY!

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Much research has been done into staking and selection systems, but quite obviously - as many punters will attest still not enough to make racing a safe and reliable business!

As has been stated in P.P.M. many times before, a good system, allied with a sound staking programme, can ease the worries of even the silliest punter, providing he or she sticks to the ground rules and is not sidetracked by distractions (i.e. other bets, changing the rules, fear etc.).

For the small punter, a 'percentage of bank' is probably one of the best ways to get the game under control. The problem with this staking approach is that it's SLOW, albeit sure. The majority of punters want instant and large windfalls; they are not prepared, or mentally equipped, for the long grind to a profit situation.

But, even allowing for this, I do recommend that any punter earnestly wishing to end up with a long-term profit, should take careful stock of what I am now going to report. The details come from an American book called High-Tech Handicapping In The Information Age, written by James Quinn (a book, I should add, mentioned by my colleague Clive Allcock in a recent P.P.M. column).

Quinn tells of the Kelly Foxed Percentage method of staking, whereby the punter invests a 'percentage of bank-roll equal to the punter's advantage over the game'. This rule is aimed top preventing the punter from betting more than his true advantage allows, a process guaranteed to result in long-term losses.

In the case of what can only be described as the 'Knockout Kelly' method, the small punter can adopt a cautious approach while, at the same time, giving himself a strong chance of ending up in massive profits in a couple of years time, providing his selections are sound and capable of turning UP a 30 per cent or greater win strike (a difficult but not unattainable task).

Quinn makes the valid claim that a good punter can perform at 30 per cent winners at average odds of 11/4. Proficient handicappers, he maintains, should begin with a recommended bankroll of $5,000 and bet a 3 per cent Kelly each time - that is, 3 per cent of the initial $5,000 and after that 3 per cent of whatever the bank happens to be.

The first bet would be $150. The long-term possibilities then come into play. Quinn says punters who can win 34 per cent of their bets on 'prime selections' at average odds on the winners of just over 5/2, can "take home a small fortune in two short seasons if they simply persist in their systematic handicapping and betting patterns."

Computer simulations of the Kelly method illustrate what he means. With a capital of $5,000 and betting 3 per cent each time, a series of 250 wagers with a 34 per cent win strike at 2.6 to 1, returned almost $22,000. The betting pattern gave one run of 19 losers.

The Kelly method at 30 per cent winners returned around $8,500 - a difference of more than $13,000 in profits because of the 4 per cent difference in the win strike.

With the number of bets under this Kelly method extended to 1,000, the 3 per cent approach (with a 34 per cent win strike at 2.6 to 1) returned more than $277,000, with a longest losing streak of 22, a longest winning streak of seven. The average bet was $1328.

The same 1,000 bets at 33 per cent win strike returned $198,765, at 32 per cent it was $161,000 and at 31 per cent $76,300. At 30 percent proficiency it returned just over $26,000.

You can see from these figures that the Knockout Kelly method is certainly worth thinking about, even for small punters with, say, only a $500 bank. Even if the 34 per cent strike rate at just over 5/2 seems difficult, you could overcome this with a lower strike rate at higher odds.

If nothing else, the Kelly method will give you a sane and sure staking approach, one that will always enable you to keep your bets on a sensible level, lowering when losing and rising when winning.

If you decide to use the Knockout Kelly, I would strongly urge you to limit yourself to one, two or, at the most, three bets per day. You must aim at securing at least one winner from each three bets (33.3 per cent) which would bring you into line with the target strike rate of 34 per cent.

Can you do it - and get an average price of around 5/2? Think carefully, then, when you are making your selections. Look for horses in this price range. It will probably be very wise to limit yourself to horses at 9/4 and up to around the 9/2 or 5/1 mark. If you can achieve a 34 per cent strike rate in this area you'll be doing very well indeed.

But, even a strike rate lower than that will still enable you to achieve profits in the long-term, employing the Kelly 3 per cent of bank approach. If you have, say, a $500 starting bank your first bet will be only $15. But that's a healthy enough figure - not too small and not so large that it frightens the pants off you!

You can use the Kelly staking with any good selection method, naturally. Some among you may care to adopt the 3 per cent approach with your exotic bets using 3 per cent of your capital to make quinella, trifecta and doubles bets. Doing this, you would not need a 34'per cent strike rate because of your expected higher returns from the exotics.

Below I have listed three betting plans that should interest small-bet punters. All are aimed at providing you with special approaches to staking. Study them all and then, compare them with the Knockout Kelly plan, and decide which one suits your style of betting.

It is essential at when you choose method of staking that you choose right one. What's the point of adopting a progression plan, say, when you're the type of punter who gets the colly-wobbles whenever you are asked to place bigger and bigger bets? Somewhere along the line, when trapped in the inevitable losing streak, you are going to 'chicken out' and the entire progression staking plan is scuppered.

If you fit this category of punter you would be much better suited to a simple level-stakes approach, whereby you are not required to lift stakes beyond the minimum level. All your heartache is eased and you do not become a victim of the 'fear syndrome'.

Each punter has a breaking point. It's not an admission of failure, or weakness, to recognise your own pain threshold. Some punters, according to their psychological makeup and their betting bank, have carrying levels of money limit beyond which it is dangerous for them to tread.

The small-bet punter, of course, finds himself in the trickiest of dilemmas. He seeks to win big, yet he can afford only to bet small. Therefore, his $1 win bets catch him in a labyrinth of mirrors - a win here, a loss there, a win there, a loss here and so it goes on. No significant money is made. In fact, losses steadily accumulate.

The only answer is for this sort of punter to seek action in the exotic pools, but even here the task is difficult because although the returns are handsome, securing those returns is difficult indeed on a bet hamstrung by not being able to link enough combinations together! Losing runs are long and testing.

Your bank, too, has to be able to withstand along losing run. This is where the Knockout Kelly method comes in well, because it allows you long runs of outs without the bank disappearing. This is vitally important for any punter, no matter what the size of his bank.

The staking approaches I have outlined should enable you to keep your ' betting well under control’ while at the same time allowing you the latitude to have a lot of fun and excitement. Make the right choice - and then away you go!

(1) THE PROGRESSIONThose punters who like backing at 'value' prices can use progression betting and still keep everything under solid control. The following progression enables you to use a 'mild' progression and still be able to do well as long as you can hit with winners around the 6/1 plus mark.

1-1-1-1-1-1-2-2-2-3-3-4.

The beauty of this approach is that a 6/1 winner at any stage will cover losses. For instance, 6 losers at 1 unit each, and then you bet 2 units. A winner at 611 would return you 14 units, giving you a profit of 6 units. If you go 11 bets without a winner (stake 18 units) your next bet is 4 units. A winner 6/1 will return you 28 units, for an all-up profit of 6 units.

(2) THE PATENTIdeally suited to place bettors, this one gives you every chance to have a wonderful day's punting with three prime selections.

THREE SINGLE BETSTHREE DOUBLESONE TREBLE

This is a total outlay of $7 (assuming $1 per unit). Your doubles are AIB, A/C and BIC. Your treble is AIB/C. Three placers at $1.50 each will return you as follows: (a) $4.50 on the three single place bets; (b) $6.75 on the three doubles; and (c) $3.40 on the treble.

Total return for the $7 bet is $14.65, for a profit of $7.65, or 109 per cent on turnover. Not bad for three placed horses at 112 each! (You can use this method for win bets, too.)

(3) THE 4/1 WINNERThis one assumes you will stop at a inner which satisfies your requirements. When you get your 4/1 inner you start the series again.

Bet series: 1-1-1-1-2-2-3-4-5-6.

This plan operates on the same basis the 6/1 winner but obviously requires stiffer progression.